Code of Conduct

Compliance with Laws, Rules and Regulations

Respect, and comply with, the laws, rules and regulations of the countries in which we operate as well as with internal directives and policies of the company. It is the personal responsibility of each officer, Director and employee to adhere to the standards and restrictions imposed by those laws, rules and regulations.


Maintain the confidentiality of confidential information entrusted to us by company and its customers, except when disclosure is authorized or required by law or regulation.

Integrity and Conflicts of Interest

Act with honesty and integrity, avoiding actual or apparent conflicts of interest in personal and professional relationships. A conflict of interest exists when a person’s private interest interferes, or appears to interfere, in any way with the interests of the company.

Any Director or employee who becomes aware of a conflict of interest or potential conflict of interest must promptly bring it to the attention of their manager or other appropriate person.

Competition and Fair Dealing

Respect the rights of, and deal fairly with, customers, suppliers, competitors and employees of the company. The company's employees seek competitive advantage through superior and honest performance, never through unethical or illegal business practices. Employees of the company do not take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of materials facts, or any other unfair dealing practice.

Employees particularly respect and promote compliance with applicable insider-trading laws, rules and regulations as well as with the internal directives and policies of the company concerning the illegal and unethical trading of material non-public information.

Corporate Opportunities

Abstain from taking personally, or directing to third parties, opportunities that are discovered with corporate property, information or position, or otherwise competing with the interests of the company, unless the company has already been offered the opportunity and turned it down. We owe a duty to the company to advance its legitimate interests when the opportunity to do so arises.

Protection and Proper Use of the Company’s Assets

Protect the company’s assets and ensure their efficient use. Theft, carelessness, and waste have a direct impact on the company’s profitability; company’s equipment should not be used for other business

Reporting any Violations of the Code

Promptly report to managers or other appropriate persons any observed violations of this Code, including any violations of laws, rules, regulations or other legal requirements. It is the policy of the company not to allow retaliation for reports of misconduct by others made in good faith by a Director or employee. Reports may be made anonymously if your situation requires that your identity be kept secret.

Compliance Procedure

If you are unsure about how to handle a situation with regard to this Code, promptly contact the Human Resources Department of the company.

The company should hold information and training sessions to promote compliance with laws, rules, and regulations. Those who violate the standards in this Code will be subject to disciplinary proceedings or dismissal.

Disclosure in Reports and Documents

Disclose information fully, accurately, timely and understandably in reports and documents that the Company files with, or submits to, regulatory authorities and in other public or market communications.

aafaq Islamic Finance adheres to the 7 core Governance Standards of the Accounting and Auditing Organization for Islamic Finance Institutions (AAOIFI)

Governance Standards

  • G S 1-Sharia Supervisory Board: Appointment, Composition, Report
  • G S 2- Shari’a Review
  • G S 3- Internal Shari’a Review
  • G S 4- Audit & Governance Committee for Islamic Financial Institutions
  • G S 5- Independence of Shari’a Supervisory Board
  • G S 6- Statement on Governance Principles and Disclosure for Islamic Financial Institutions
  • G S 7- Corporate Social Responsibility Conduct and Disclosure for Islamic Financial Institutions

Sharia Research & Secretariat

The Sharia Research & Secretariat Unit comprises qualified Sharia officers who conduct the pre-product approval process, research, vetting of issues for submission and undertake administrative and secretarial duties relating to the Sharia Committee. This unit is divided into two functions:


Responsible for performing in-depth research and studies on Sharia issues, including providing day-to-day Sharia advice and consultation to the business and support units and/or those involved in the product development process.

Sharia Review

The Sharia Compliance Review exercise comprises of qualified Sharia officers, who are responsible for conducting the Sharia compliance review function. This review includes a regular assessment on Sharia compliance in the activities and operations of the Company, including examining and evaluating the Company’s level of compliance to the Sharia remedial rectification measures to resolve non-compliances and control mechanisms to avoid recurrences.


Responsible for coordinating meetings, compiling proposal papers, disseminating Sharia decisions to relevant stakeholders and engaging with relevant parties who wish to deliberate issues with the Sharia Committee.

The responsibility also includes coordinating submission of proposals to the Company’s Boards and UAE Central Bank on the appointment and reappointment of the Sharia Committee members.

Sharia Risk Management

The existing Risk Management framework also includes risk identification measures of Sharia non-compliance risk. Sharia Noncompliance risk is defined as the Company’s possible failure to comply with Sharia rulings as determined by the relevant Sharia Committees and regulatory bodies.

Sharia Audit

Sharia audits are undertaken as part of the Company’s existing internal audit. Findings related to Sharia products and services are reported to the Sharia Committee.

Credit Committee

The credit Committee is chaired by the CEO and comprises of 5 members. The purpose of credit risk management is to keep credit risk exposure to an acceptable level in relation to the capital outlay, and to ensure the returns commensurate with risks. aafaq has implemented risk-based delegated authority framework that promotes clarity of risk accountability by being consistent with three-lines of defense model on risk management; and the risks are managed from the point of risk-taking activities. The business unit is the first line of defense that manages risk proactively with the Company’s Credit Risk Department (CRD) which functions independently as the second line of defense. This enhances the collaboration with controls in form of segregation of duties.

The Company adopts a multi-tiered credit approving authority spanning from delegated authorities at business levels; joint delegated authority holders between business units and CRD, to the board credit committees. The credit approving committee is set up to enhance the efficiency and effectiveness of the credit oversight as well as the credit approval process for all credit applications originating from business units. Credit applications are independently evaluated by the CRD team prior to submission to the committee for approval. The responsibilities of the Credit Committee include the following:

  • To review/veto finance exceeding the Credit Committee’s unrestrictive power;
  • To review/veto, with power to object or support, all proposals recommended by the Board for approval/affirmation;
  • To also affirm annually existing limits approved by the Board and recommended by the credit committee for renewal;
  • To carry out such other responsibilities as may be delegated to it by the Board from time to time; and
  • To provide oversight of the entire credit management function covering but not limited to portfolio, end-to-end process, infrastructure, resources and governance.

Investment Committee

Board has mandated the Investment Committee to review, analyze and approve corporate matters relating to the investment strategy outlined by the Board and to continually monitor aafaq’s financial and operational performance in the investments undertaken by aafaq along with assessing future investment opportunities. The Investment Committee includes members who are various head of departments operating within aafaq’s business lines and support functions notably representatives from finance, legal, Risk Management and a member from the Internal Sharia compliance department to ensure alignment and synergies across all the core business sectors and support functions are involved in the review, approval and decision making of Investment being undertaken by aafaq. The Committee convened 5 times in 2015 to discuss.

Executive Committee

The primary role of the Executive Committee is to oversee the implementation and monitoring of the Board’s decisions and to provide strategic guidance for the Company up as delegated by the Board and the committee.

The key responsibility of the Board Executive Committee includes the following:

  • Review and provide input and guidance in the implementation and monitoring of the strategy (ies) and all other matters approved by the Board.
  • Review the strategic and business plans and budgets of the Company.
  • Review potential investments, mergers, acquisitions and divestitures of businesses and other assets of the Company.
  • Review management reports from business and support units on key initiatives undertaken by the Company.
  • Monitor and evaluate political, economic and business conditions and developments in the financial markets on an on-going basis and to discuss with the management of the Company to ensure that any potential material impact is identified and managed accordingly.
  • Consider other matters or undertake such duties and responsibilities as required from time to time by the Board.

Proactive Communication with Shareholders

The Board ensures that shareholders are well informed on aafaq’s business strategy and direction. Transparent and timely communication with the shareholders is essential in successful implementation of aafaq’s strategies and helps to foster shareholders’ confidence in aafaq’s success. To raise the level of corporate credibility and governance as well investor confidence setting of a communication policy was essential thus leading to aafaq designing a communication framework with clear sets of communication guidelines and protocol’s. The communication guidelines and protocols encompass the following:

  • Use of the various available mediums of communication,
  • Policies and procedures relating to dissemination of information to the Shareholders, media and other stakeholders,
  • Step-by-step approach in handling material information; and mechanisms used to gauge external opinions

Contacts and communication with stakeholders are conducted through the designated spokespersons approved by the Board or the Company’s Chief Executive Officer.

Financial Statements Reporting & Accountability

Financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS) and UAE Central Bank guidelines. The Financial Statements are prepared with an ongoing concern thereby providing true and fair view of the state of affairs of aafaq as of 31 December 2015. Appropriate accounting policies have been applied consistently in preparing the financial Statements, supported by reasonable and prudent judgment and estimates. The Directors have overall responsibilities in taking such steps; and are open to safeguard the assets of aafaq; ensuring aafaq’s financial report delivers a balanced and comprehensive assessment of its financial position and prospects.

The Audit Committee assists the Board in overseeing the financial reports, internal control, risk management and governance processes currently operating within aafaq. The Audit Committee reviews the quarterly, semi-annual and year-end financial results, audit plan, audit report, functions of internal audit, related party transactions, conflict of interest situations and independence of external auditors. As per the requirement of the Central Bank, aafaq meets the required submission of its financial statements along with the required regulatory written confirmations of its compliance requirements set out by the Central Bank within the stipulated timeframe.

Internal Control

The Board has a key mandate to ensure and establish a sound system of internal control and in determining aafaq’s level of risk tolerance as well as to continuously identify, assess and monitor key business risks to safeguard shareholders’ investments and aafaq’s assets. These functions are carried out by the Audit Committee and Risk Committee which are responsible for risk management functions, financial reporting, disclosures, regulatory compliance and internal control processes. To achieve this, the Board ensures that the business processes, risk management, policies and procedures, and control mechanisms are adequate and appropriate through periodic review, testing and assessment as set out through the audit and risk management plans. aafaq’s dynamic operating environment requires the Board to constantly review and monitor the effectiveness of its system of internal controls. Regular self-testing and high level risk assessment are conducted, followed by review and update on a periodic basis. Based on the review undertaken throughout the year, the Board concluded that aafaq’s system of internal controls is adequate in meeting its changing needs and regulatory requirements.

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